Inter-bank market Rupee drops record low Rs138 to dollar
Pakistan hit by a large fiscal, account deficit, a low level of reserves: IMF official
The rupee was in free fall in the inter-bank market on Tuesday morning as it shed more than Rs11 against the US dollar over fears that the International Monetary Fund (IMF) conditions for a loan will further devalue the Pakistani currency.
The rupee went past Rs138 to a dollar during the day’s trading session.
Traders said fears of devaluation increased demand for the greenback from importers and added that the local currency is continuously showing weakness.
On the other hand, the stock market opened on a strong note on Tuesday after losing 1,300 points on Monday. In the morning session, the KSE-100 index gained 1,100 points to break the psychological barrier of 39,000 points.
On Monday, the government announced to seek IMF’s help to cope with the country’s financial crisis. Finance Minister Asad Umar vowed to revive the economy on a sustainable and permanent basis and promised steps to provide relief to common people.
Speaking on Tuesday at a news conference at the IMF and World Bank annual meetings in Bali, Indonesia, IMF Chief Economist Maurice Obstfeld said that Pakistan has not formally approached institution for financial assistance.
Obstfeld said that Pakistan faced financing gaps as it has been hit by a large fiscal and current account deficit, a low level of reserves and a currency, which he described as “too rigid” and over-valued. China’s involvement in Pakistan’s economy could bring both benefits and risks, Obstfeld added.
Prime Minister Imran Khan, who has been reluctant to ask the IMF for emergency loans, said last week Pakistan might need to return to the IMF to address its mounting balance of payments crisis.
If there is an IMF bailout package, it would be the second for Pakistan in five years.